Rate Cut Fails to Lift Futures Higher
Futures were poised to add to post-election losses, as intensified worries about the global economy outweighed a sharp Bank of England interest rate drop.
Traders briefly sent futures up after the BOE slashed its key lending rate 1.5 percentage points to 3 percent, but the momentum quickly stalled. and stocks were poised to drop 1 percent or more off the opening.
"They're coming to the party with some big numbers--certainly a surprise--but the reaction in the States was more muted than what I would have guessed," Kevin Ferry, of Cronus Futures Management, said on CNBC. "Certainly a welcomed addition to the party. Even though they're coming late they're coming big."
The market was largely unfazed by the weekly jobless-claim report, which showed the number of workers filing first-time claims for unemployment insurance fell by 4,000to 481,000 last week, in-line with expectations. The prior week, however, was revised to 485,000 from 479,000. The four-week moving average, which smooths out weekly fluctuations, was unchanged at 477,000.
Cisco shares declined after the networking-gear maker warned late Wednesday that its revenue could drop as much as 10 percentin the current quarter as the economic slump spreads to Europe and Asia.
And Toyota slashed its annual operating profit forecast by more than half, as the financial crisis hit auto demand, cut access to credit and sent the yen higher.
Toyota shares tumbled 7 percent in premarket trading.
Enthusiasm from the election of Democrat Barack Obama as the new president failed to cheer the stock market, which shed 5 percent Wednesday despite hopes that a new administration could help reverse what ails the economy.
Oil prices also continued to reverse a sharp move higher Monday, with crude dropping nearly $1 below $65 a barrel.
The only ray of light came from Wal-Mart , which reported October sales up 2.4 percent, better than expected, and said it would continue to slash prices every week until Christmas. The chain dubbed its effort to help cash-strapped consumers "Operation Main Street." Shares edged higher premarket.
Dana Telsey, of the Telsey Advisory Group, analyzes retail sales in video at left.
Asian stocks sank, overwhelmed by recession fears, while oil companies and banks dragged down European stocks.
Obama's victory and an expanded majority in Congress could encourage Democrats to make up a list of economic stimulus measures by Christmas, as more and more people ask "where is my bailout," analysts told CNBC.
The European Central Bank is expected to cut rates by at least half a percentage point, as recession clouds gather above the euro zone, while in the UK analysts are already wondering if the Bank of England's interest rate will eventually come down to zero.
However some companies seem to be seeking opportunities with LaSalle Investment Management announcing it is raising a 400 million pound ($632 million) fund to pick up bargain property in a British market, where some assets are being sold at 20-30 percent discounts to their value.
Major Wall Street firms are expected to slash annual bonuses for executives an average 50 percent or more, senior executives told CNBC.
In earnings news, Rupert Murdoch's News Corp cut its full-year forecast and posted a worse-than-expected 30 percent drop in quarterly profit because of falling TV advertising.
World number two brewer InBev insisted its $52 billion takeover of Anheuser-Busch was on track after third-quarter results slightly exceeded expectations despite rocketing costs.